MARK DODSON has warned that Scottish Rugby faces a period of significant retrenchment as a consequence of the Covid-19 pandemic, despite the cash injection of “north of £20 million” which will arrive off the back of Guinness PRO14 selling a 28 percent stake in the league to CVC private equity house.
The chief executive insists that the CVC money will be ring-fenced until the full impact of the pandemic has been assessed and a recovery plan has been formulated. The SRU’s share in the deal – which is less than that being paid to Wales and Ireland, who each have four teams in the league compared to Scotland’s and Italy’s two – will arrive in unspecified instalments, with the first tranche due “almost immediately”.
Dodson also insisted that the value of the deal had not fallen as a consequence of the current turbulent economic climate, although it seems likely that the timings of payments have been altered due to the uncertainty which currently surrounds the game. “The value is the same, that is what has surprised people, we have come out of it with a slightly different shape deal but the values are the same,” he stressed.
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“We have been talking to private individuals and particularly CVC for the last two or three years and have got to know them very well. They understand rugby and rugby ecology. As we went into Covid-19, it was a shock for everyone. They took their time to think about how they wanted to deal with it, it took longer to conclude because of that, but we have come out with a solidarity around the sport itself and a deal we are very happy with on both sides.”
While the investment is a welcome boost to Murrayfield’s finances, Dodson stressed that its potential impact should be kept in perspective at a time when there is a very real danger that the Six Nations cannot go ahead, which would could cost Scottish Rugby £40million (two thirds of last year’s turnover).
“It helps enormously, gives confidence to our banks, it gives confidence to everyone around, but it’s not a cure,” he said. “If this goes into next year it could be £40m. Until we get our arms around exactly how much this is going to cost the union in terms of lost income we are not out of the woods by any stretch of the imagination.
“We’re delighted with this, but by no means are we underestimating the challenges ahead of us. It is not going to make a fundamental short-term difference to the business.
“We’ve got to understand the new future,” he added. “We’ve been expanding this business for the past ten years and now you’re going to see a period of retrenchment. Nobody knows what sort of shape rugby – be it grassroots, professional or international – is going to be in in the future. So that’s why we want to make it very, very clear: this money is safe-guarded, it’s ring-fenced.”
Dodson confirmed that the current strategy in terms of staff being furloughed and earners over £50,000 taking wage cuts has not changed as a result of this investment.
CVC’s 28 percent share in the league leaves the Unions with a 72 percent share collectively, raising questions about whether the private equity house working in conjunction with one of the Unions could take control of the business.
“Without going into the complexities of the governance of how it will work, it doesn’t work like that,” said Dodson. “There are safeguards around sporting regularity matters, safeguards around the commerciality.
“They see themselves as partners, they want to influence the game in terms of commercial aspects, but what they are not going to be involved in is the sporting and regularity aspects, and we have made sure protections are built in around that.
“We have gone to tremendous lengths to make sure this deal has been endorsed [inside Murrayfield]. We have our own Board and our own investment committee, which is made up of members of the Council, members of the Board and we have also had Dickson Minto, a famous and respected financial house in Edinburgh, as an independent advisor to the Board and investment committee. We have also had our advisors that have been advising the Celtic unions and the PRO14 so we have had various levels of oversight and all have come to the conclusion that this is a good deal.
“I think at the moment Covid-19 has paused a lot of people’s ideas about negotiating broadcasting deals. We’ll regroup and we’ll go out and consult, and broadcast is just one of many areas where we will recalibrate, but I expect to see a host of broadcasters to be queuing up to ensure that they are part of PRO14 going forward.”
CVC’s ownership of Formula 1 between 2006 and 2017 has not been universally acclaimed, with critics arguing that their short-termist approach hollowed out the sport, sacrificing accessibility for a quick buck.
“Whatever deal they struck with Formula 1 and how that worked is another issue,” rebuffed Dodson. “On this deal they have committed a significant amount of money to the league, and the ambition is that everyone will earn more. The whole purpose of inviting an investor into the league is that it can supercharge revenues.
“The idea is that we can bring extra money into the league for everybody, them included, so our whole purpose is to make sure this is how we maintain PRO14’s growth.
“This deal sees a long-term sustainable league. We understand that there’s going to be disruption for up to nine, ten months through coronavirus. They are looking way beyond that: it’s a commitment to our league in the longer term. In real terms it’s going to take a good number of years to supercharge the commercials without it. So, they’re seeing this as very much a long-term play.”
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The Question is what % of the cash has Dodson trousered………………I dare say we will only find out when he has gone!
Let’s just take a look at CVC. It would seem they are worth £61.6Billion, so getting ‘North of £20million’ should be put in perspective, Dodson and Co. haven’t exactly cleaned them out.
CVC are listed as a ‘Parent Organisation’ to Sky Betting and Gaming founded by Sky Group along with Stars Group who are part of Flutter Entertainment who were created by Paddy Power [with a majority share holding] and with their headquarters in Dublin and conveniently close to the CVC offices in Dublin 4. Pro14 have headquarters in Dublin as do the Pay per View Premier Sport that’s convenient.
Coincidentally World Rugby and the IRFU and the 6 Nations are all located in Dublin, all within 10 minutes walking distance of each other apart from the Pro 14 Office in Arkle Rd that is 10 minutes in the car. All being nice and cosy in or around Dublin 4 I suppose it saves on the Taxi fare when they all meet up at the Shelbourne for the Liffy Water, actually speaking of which aren’t Guinness involved in some way as well?
What a coincidence. It would be even more of a coincidence if the CEO of Premier Sports Channel Richard Sweeney was related to Bill Sweeney CEO at the RFU, that really would begin to be just a bit uncomfortable, if you get my drift.
It’s all to do with tax George. Hence why Apple and Google are headquartered in Dublin for their European businesses.
I know Dom bu it is all a bit cosy for my money and regarding the Tax regime there was me thinking it was a level playing field within the EU.
Dodson has a thankless task, damned if he does and damned if he doesn’t. I think he deserves a lot of credit for his contribution to this deal being sealed. All cash injections at this time have to be welcomed but at least Dodson isnt claiming that the SRU are out of the woods financially. His caution has to be commended
Dodson is a cog [and not a particularly important one] in the negotiating machine no more no less, however his dismissive repost regarding the disquiet within the paddock of Formula 1 is indicative of the individual.
That Dodson should consider he is sharper than the Suits that run F1 is laughable.
I would also question the damned if he does or doesn’t, he is damned for allowing or condoning the problem with Russell for a start and a glance at any photograph I have seen of him doesn’t suggest a ‘touchy-feely liberal’ individual, and that personae rarely reflects in a management technic that relies on anything other than ‘there’s my way or there is the door’.
There are far too many critical voices across Scottish Rugby directed at Mr. D and others within the walls at Murrayfield and not many outside of his acolytes with a positive position.
What has Dodson done to achieve this deal? Dom McKay is the rep on Pro14.
Ha ha very good MisterC. Or should that be MisterD?
Yes of course, as Bryce Weir states, the SRU will suffer considerable loss of income, or revenue, which will translate through the P&L A/C as a reduction in profit, or more likely as “loss”…. The impact on executive bonuses will depend upon how and on what basis the remuneration packages have been drawn up; I suspect most probably not relating to profit or loss, but tied instead to the amount of “new investment” introduced…. Whatever, it looks good for a veritable host of fee-earning external consultants & advisers!
It is really difficult to envisage a truly successful, financially viable cross-border competition model like Pro14 going forward, certainly in the short to medium term. Consequently, this CVC deal looks very like a convenient financial bailout opportunity for the 4 principal shareholding National Unions – and, for the investors themselves a “loss-leading” punt in a buyers market, enabling them to progress their presence and influence across the global or at least the NH rugby jigsaw….
Well, in the end all losses are essentially tax free profits in future years, so providing there is a profitable future for Scottish rugby, there is no loss incurred, just lost revenue/profit.
There is extensive use of “we” in this piece.
Who does we refer to? PRO14? Scottish Rugby? What MD has actually done to get this deal over the line?
SRU used to own a 3rd of the pro14, just before these negotiations this seemed to become a quarter. They’ve now some how managed to turn a quarter of the deal equating to 30 million into 20 million. It could be they don’t know the difference between 20 and 30 million or they’ve managed to negotiate an even worse cut of the money. I saw on another site that the Irish are getting 30 million pounds, 5.6 million right now and the rest paid over 3 years. Shouldn’t the SRU be getting the same.
if we got the same per team we would get less. You tell the Irish and welsh that we should get the same and they’ll show you the door. CVC and the league making money from this is not going to depend on the huge wealthy population of Scotland
Obviously ‘Supercharge’ is the new trendy word promoted by CVC and Mr. D is giving it plenty of airing, however what about some of the other declarations: North of £20m – arriving in unspecified amounts – almost immediately – the value is the same – Ring fenced [for what?].
This announcement has more wriggle than Houdini ever mastered. Why can’t the actual figure be disclosed, it isn’t confidential or shouldn’t be and why can’t Dodson say what it is being ring-fenced for, or at least give an indication as to the aspirational aspect of where the money will go.
It’s the language of a Snake-Oil Salesman; not unsurprisingly.
I hadn’t realised supercharge meant bale out.
Panic at the disco
A couple of interesting points in there.
1) SRU were an equal shareholder in Celtic Rugby DAC (33%) – yet they sell part of their stake but receive less cash – something not right here. I wonder what else has been done – which takes us onto point 2.
2) “a slightly different shape deal” – so if we keep the cash the same, then we want something else in return. I wonder what additional sweeteners have had to be thrown in to get this over the line.
I wonder how many guarantees there are around his claim the money will be ringfenced until this crisis is over.
our 33% was worth nothing until it was sold. Italians now full members rather than poor cousins so get a share
Your point about how long it can be ring fenced in the current problems is well made. I’m pleased the intention is to ring fence it, if we have to use it to preserve our teams until a better future, well needs must maybe
Welcome back Mark. Good to see you could take your attention away from dealing with the crisis to announce this good news story.
I saw an Irish journalist say that the IRFU part of the deal was £30m. £5m now and varying amounts over the life of the deal.
But back to Mark.
This is the first indication from Murrayfield of the tough times ahead. Dom McKay has used very different language in his statements. Given what the WRU and English RU have been saying at least we are beginning to open up somewhat.
“this money is safe-guarded, it’s ring-fenced.“ – mm how does that work in a business you yourself says is in an unprecedented situation with no income?
“ gives confidence to our banks” – Interesting. Why would the banks be worried? I thought the SRU finances were the envy of the rugby world?
Hopefully we hear from you again soon!
debt free in fact
If only!
the Irish and Welsh get more because they have 4 teams in the league. As we have but 2 and get £20m rather than a pro per team, sounds like decent deal to me
Sack him with no pay off!
£40m loss or £40m less revenue?
Such laxity of terminology does not inspire.
My cynical side says some balance sheet deferrals might be shipped under the smoke screen.
Don’t think you are being cynical about the situation and I would put ‘Folding Money’ on the smoke screen and chuck in a couple of mirrors.
good point. every Union has used the same way to describe their plight – loss of revenue, loss of income. Its a big number and makes the point an dis an easy thing to grasp but it isn’t the key number – which is profit or loss. The loss of revenue is to at least some extent offset by reduction in costs ( wage cuts, furloughed staff, less ground maintenance, no stewarding costs etc etc)